Daily Energy Market Report 13th Dec 18. Strong open on the NBP this morning on the back of colder and calmer revisions to weather models and continued strength in wider commodities; coal and carbon.
Temperatures models have revised cooler overnight with LDZ demand revised upwards for the weekend.
There is no risk of significant cold for the remainder of the year with an increase in temperatures expected through the final week of December.
Wind has also been revised downwards with calmer conditions expected, increasing gas for power demand.
The UK system is 35mcm long this morning with forecast demand at 321.5mcm, 42.6mcm above seasonal normal as result of colder weather.
Storage withdrawals sit at 30.5mcm, a large increase of 17.3mcm day on day.
UKCS and Norwegian flows remain the main sources of UK supply, sitting at 72.2mcm and 74mcm respectively.
On the demand side, LDZ has lifted 21mcm on yesterday to 243mcm with gas for power demand dropping slightly to 58.8mcm.
Brent has moved lower overnight following comments from Iran’s oil minister suggesting divisions exist within OPEC; it is currently at $60.09/bbl. at time of writing.
Gains saw throughout yesterday because of an outage at Libya’s largest oil field and easing US/China trade war tensions were lost towards the end of yesterday as a result.
Daily Energy Market Report 13th Dec 18 reports European coal prices have risen to their highest levels since mid-November as bullish technical signals and increased buying lifts the market.
Strike action is also due to take place on a major coal route in Australia as workers at the country’s largest freight rail company are set to walk out.
Australia is a key exporter of coal to Europe so any disruption will likely have a bullish effect on prices.
EUA’s have also seen strong gains in the last couple of days rising in line with European power prices.
The market is also expecting supply cuts next year with the number of EUA’s available to the market likely to be reduced and so traders are entering 2019 with long positions, which is also supporting prices.
On FX, ‘The conservative party does have confidence In May’s leadership’ was the major headline overnight and despite the turmoil in the tory party GBP has gained this morning as May seeks new assurances from the EU over the Irish backstop.
USD remains supported as it consolidates near 1-month highs with rebounding US bond yields and US/China trade optimism extending support.
Daily Energy Market Report 13th Dec 18 brought to you by British Utilities